What Are Physician Loans?

Date Published:

November 2nd, 2018

The road to becoming a doctor is not only challenging, it’s expensive too. The majority of medical students graduate with close to $200,000 in medical school debt. This figure alone makes it difficult for new physicians and doctors to get ahead of their finances, as well as achieve things like purchasing a new home. Fortunately, there is a special kind of mortgage loan that is designed specifically for doctors. Regardless of what your debt looks like, you may be eligible for a physician loan. As Fayetteville’s Top Rated Local® mortgage broker, The Mortgage House, LLC. has assembled this quick guide to physician loans.

The Advantages of Physician Loans

Physicians are a great risk for banks because doctors are the least likely profession to default on their loans. This means that banks are often willing to connect physicians with special lending options. A physician loan avoids principal mortgage insurance, which is a policy that protects the bank if the borrower were to default on the loan. PMI is very expensive, isn’t tax deductible, and really doesn’t do anyone any good. As a physician, you can effortlessly avoid this expensive policy. These loans also help new doctors get into homes quickly. Rather than relying on your proof of income or two years of tax returns, banks will instead review your employment contract. This lets physicians move into a home more quickly, letting them get settled in their new location before opening their practice. Finally, physician loans are one of the few ways that debt-ridden new doctors can get approved for a mortgage. This is because that many banks select to look past a borrower’s debt-to-income ratio when they are a doctor.

Who Qualifies for a Physician Loan

While these loans are exclusive to those in the medical field, who qualifies for a physician loan is rather broad within that field. When applying for a physician loan, you’ll need the following:

Proof of a medical degree.

A contract that has been signed and indicates that you are starting your new position or practice within 60 to 90 days.

A FICO credit score that is between 680 and 720.

Proof of deferred student loans.

And a debt-to-income ratio of 45% or less that does not include your student debts.

Fortunately, nearly every kind of medical practitioner can apply for and receive a physician loan, including:

Medical Resident

Doctor of Medicine

Doctor of Dental Surgery

Doctor of Osteopathy

Doctor of Optometry

Doctor of Dental Medicine or Surgeon

Doctor of Pediatric Medicine

You must have completed your residents or fellowship program and are poised to start a new job, or have fewer than six months remaining in your program to qualify for a physician loan.